Monday, September 30, 2013

Violence in Iraq has escalated to the worse levels seen
since 2008. The insurgency is making a comeback, while the central government
is repeating many of the mistakes made by the United States after the 2003
invasion. The cause of this crisis is a breakdown in the country’s politics.
Members of the Sunni community feel increasingly alienated from the government,
because their national leadership has failed, their local politicians are
ignored, Baghdad has focused the security forces upon their areas, and the
protest movement has not achieved any tangible results. To help explain how
this situation has led to the current security crisis is Maria Fantappie, a
former visiting scholar at the Carnegie Middle East Center and currently an
Iraq researcher for the International Crisis Group. You can follow her on Twitter
@Maria Fantappie and the International Crisis Group @CrisisGroup.

(Abdul Raheem Yasir)

1. In 2009, Sunnis
went to the polls after largely boycotting the 2005 provincial vote, and helped
put a slew of parties into power. In 2010, many of those same voters came out
for Iyad Allawi and Iraqiya, the Iraqi National Movement (INM) which won a
plurality of seats in the new parliament. How did Allawi and the other members
of the INM turn out to be as national leaders, and how did their performance
affect their followers’ opinion of participating in politics?

The key for political success in Iraq is to branch out power
from Baghdad into the provinces. Iraqyia leaders focused all efforts on the
assignment of government positions in Baghdad, neglecting local officials and
constituents in the provinces. This was fatal to the future of the list. Starting
from early 2011, while Iyad Allawi persisted in claiming the premiership for
himself and the implementation of the Irbil agreement in Baghdad, Maliki
ingrained power in the provinces: governors were replaced, police chiefs sacked
and Sahwa tribal militias deprived of their salaries. Sunni constituents felt
disappointed by their national leader and left under the grip of the government
security agencies. Their disappointment evolved into distrust towards the
political process altogether. In their eyes, Iraqyia leaders appeared not
dissimilar from others of different political colors: locked within Baghdad
Green Zone walls and far from people’s concerns.

2. In December 2012,
Premier Maliki decided to go after then Finance Minister Rafi Issawi of the INM
by issuing warrants for some of his guards. Exactly a year before, a similar
situation unfolded with Vice President Tariq al-Hashemi who ended up being
convicted in absentia for involvement in attacks. Previous to that, selected
leaders of the local security forces known as the Sons of Iraq faced detentions
as well. How did these events shape Sunni views of the security forces and
Maliki’s rule?

These arrests created the premises for conflict, shaping
Sunni self-perceptions and their perception of the government. Sunnis started
viewing themselves as victims —targeted by the security forces, excluded from
state-institutions, persecuted as terrorists or Baathists —and the government
as the source of all this injustice. Al-Issawi events brought these feelings to
the boil, exacerbating perceptions of the government’s anti-Sunni agenda,
serving the Shiite interests within Iraq and the Iranian agenda in the Middle
East. Nine-months of political crisis have turned perceptions into reality. Now
more than ever, Sunnis are what they feared to be—excluded, discriminated and
criminalized —and the government close to the way they had accused it to be: repressive,
discriminatory and bound to Iran’s agenda.

3. How did the
regional environment and Syria contribute to the escalation of Iraq’s domestic
crisis into a conflict?

The regional environment polarized Iraq along sectarian
lines, reducing the space for negotiation between the government and protesters.
Earlier in 2013, the rise of the Muslim Brotherhood in Egypt and the prospect
of a Sunni power governing Syria nurtured Iraqi Sunnis hopes for a political
comeback boosted the Iraqi Islamic Party aspirations to leadership and mobilized
Iraqi Sunnis in protests. This, in turn, directly fed Maliki fears’ of the rise
of Sunni radicals in the region pushing the government to assume a defensive position,
close to Iran and the Shiite crescent in the region.

4. What divisions
have emerged within the demonstrators, and have they been able to achieve any
meaningful results?

The conflict evolved over a series of missed opportunities
for dialogue from both the government’s and the demonstrators’ side. But the
demonstrations’ failure to bring about political leadership gave the government
one more reason to shun dialogue and persist in its immovable positions. Sunni
tribes, clerics, Iraqi Islamic Party members and insurgency militants gathered
into demonstrations against the government, because of a shared feeling of injustice.
But protest leaders were often concerned with gaining legitimacy as prominent politicians,
clerics, tribal chiefs and thus pushed forward parochial agendas rather than
lobbying for the protesters’ demands. Among others, the Iraqi Islamic Party
project of establishing a Sunni federal region divided the demonstrations
square between proponents and opponents of federalism, and challenged the
formation of any negotiation committee.

The Sunni protest movement was a symbol of the dissatisfaction with politics, but also allowed militants to gain more supporters as shown in this photo with black Al Qaeda in Iraq flags flying (AP)

5. How has the
failure of national parties, arrests of leaders, and the protest movements
inability to bring about changes in government played into the hands of
extremists and the insurgency?

Above all, the government’s violent response provided Sunni
armed groups opportunities to increase their recruitment and safe-heavens. On
23 April, the government’s violent crackdown on Hawija’s protest sit-in empowered
the most radical voices among protesters and silenced those calling for
dialogue. The government sowed hostility among Sunni tribes as it armed a new
Sahwa faction, depriving others of their salaries, as well as among Sunni
citizens, policing their neighborhoods and limiting their mobility. Baghdad
lost Sunni local support and with that, the human intelligence needed to
counter the re-emergence of armed activities in their areas. Insurgency cells who
fought against the U.S. troops found fresh recruits among the frustrated Sunni
youth and reactivated their operations in the Kirkuk and Salahaddin provinces. For
the first time in years al-Qaeda in Iraq, the Islamic State of Iraq, can count
again on local support.Iraq’s al-Qaeda is
now operating with impunity in western Anbar, across the Iraq and Syria border
as well as in Syria under the name of Islamic State of Iraq and the Levant, gaining
the support in Sunni areas, helping Iraqis and Syrians in their struggle
against their respective governments, Baghdad and Damascus and the resurgence
of Sunnis in the region.

6. A major problem
faced by the Sunni community since 2003 is the lack of unity. They have been
split between armed struggle and participation in the government, between local
and national politicians, nationalist and regional agendas, and other issues.
Why do you think there have been so many divisions, and how could they start
working together more effectively?

Sunnis do not necessarily need their leaders to ally on the
basis of their belonging to the Sunni sect. What Sunnis need is what Iraqyia failed
to provide them with: representative leaders. I see the existence of different
ideological trends (e.g. Sunni secular and Islamist trends) as rather
beneficial to the formation of inter-sectarian and inter-ethnic alliances that
will help overcome a rather communitarian political system. Whether together or
separately, both Sunni secular and Islamist trends should focus their efforts
in effectively representing their base, reach out to provincial officials, help
to define the demands of their constituents in the provinces and represent them
in Baghdad central institutions.

7. These splits have
allowed Maliki to play divide and conquer. Could you provide one or two
examples of how the premier has been able to use that tactic, and why do you
think he could face long-term troubles if he continues down that path?

So far, Maliki’s policy towards the Sunnis has been rather
self-damaging. Al-Issawi events unified
Sunnis against the government, crashed the PM’s image as an Iraqi national
leader and compelled him to seek even more U.S. and Iranian support to maintain
power. The PM’s policy toward Sunni tribes is archetypal of the short-term benefits
of a divide-and-conquer strategy. On February 2013, the government dismantled
the Sahwa leadership and supported the formation of new pro-governmental Sahwa corps— the New
Sahwa —providing them with weaponry, salaries and privileges, leaving the
former one with empty hands. Last May, al-Qaeda could expand its operations
across the Iraq-Syrian frontier, mostly counting on co-operation, weaponry
supplies and recruits of former Sahwa, now disenfranchised by governmental
policies. In the absence of a radical change of approach, the government risks
to further alienate Sunnis from the state, bolster Sunni solidarity with the
Syrian armed oppositions, pushing them to cooperate with radical armed groups
as a way to weaken the government legitimacy. If there is any way to insulate
Iraq from the impact of the Syrian conflict and also for Maliki to secure his own
power, this consists in an inclusive Iraqi state.

8. Rather than using
greater force, what Iraq needs is some serious concessions and reconciliation
to pull the Sunni community back to politics and away from the use of force.
What kind of reforms should Baghdad consider?

In order to end violence, the government should win Sunnis back
to its side. No security improvement will be reached without involving the Sunni
population, security forces and tribes in fighting al-Qaeda and insurgency
groups. A first step consists in dealing with outstanding issues that have
generated the divide between the government and the Sunni population: deployment
of security forces in Sunni populated areas, Sunni participation to the
security forces, waves of arrests and exclusions upon alleged affiliation to
terrorist groups and or Baathist regime. Also, Sahwa should return to be a
united corps and ensured with monthly salaries. Any security plan should
involve the co-operation with Sunni local officials, locally recruited police
forces and Sahwa corps. Considering the number of missed opportunities to solve
this conflict, it is legitimate to question whether or not the government ever
made a serious effort to avoid reaching to the current level of violence.

One of the major issues facing PM Maliki is whether he can put aside his immediate concerns and think long-term to hold onto power

9. Maliki would have
to start thinking long-term to try to push for those changes. Right now he
seems more focused upon looking strong in the face of the increasing violence,
and preparing for next year’s parliamentary elections where he will face tough
competition. Do you think he’s capable of putting aside those immediate
concerns, and thinking big picture, which might assure him of a longer reign,
and a more governorable country?

The lack of a legitimate Sunni leadership to ally with might
turn into the prime minister’s biggest liability to a third term on power. The
recent crisis delegitimized those Sunnis loyal to the prime minister and
empowered a Shiite anti-Maliki bloc, the Islamic Supreme Council of Iraq (ISCI)
in particular. Last June, the formation of local councils proved that a Shiite
anti-Maliki bloc is a winning formula. ISCI and the Sadrists forged an alliance,
and together with the Sunnis’ Mutahidun list garnered the majority needed to
rule out Maliki’s coalition from Baghdad governorate. An isolated prime
minister will hardly succeed for a third term. If, before or after the
parliamentary elections, Shiite groups will stand together against the prime
minister, only an alliance with a strong Sunni group could ensure Maliki a
third term.

SOURCES

Carnegie Paper, “Contested Consolidation of Power in Iraq”,
February 2013

International Crisis Group, “Make or Break: Iraq’s Sunnis
and the State,” 8/14/13

Thursday, September 26, 2013

Sheikh Jassim Mohammed Salah
al-Suwadawi of the Albu Soda tribe and Sheikh Abdul Rahman al-Janabi of the
Albu Mahal tribe were two prominent tribal leaders in eastern Ramadi. They
found themselves unemployed after the 2003 invasion, but unlike many of their
compatriots they did not turn that frustration into armed struggle against the
Americans and Iraqi government. Instead they attempted to reach out to Baghdad
and the U.S., but their initial attempts were failures. Eventually they joined
the Anbar Awakening and helped secure the province. Along the way they lost
many relatives and followers to violence. Their story shows the early struggles
and consequences of joining the tribal revolt in Western Iraq.

Sheikh Suwadawi and Sheikh Janabi
were both military men who found themselves without jobs after 2003. Suwadawi was a non-commissioned officer in the Air Force who worked on jet fighters. Janabi was an officer in the special forces during the Iran-Iraq War, but left
the army in 1991, only to be recalled in 2001. When the Coalition Provisional
Authority disbanded the military in 2003 they both lost their jobs. They needed
to decide what to do next. Many fellow soldiers became angry with the Americans
for costing them their jobs, and were early recruits for the insurgency. Suwadawi
and Janabi went in another direction.

Faced with their situation, the
two sheikhs attempted to reach out to the new powers that be, Iraqi officials
and the United States. In September 2003 Janabi got in touch with his uncle
General Ibrahim Said who was afraid of an Iranian invasion after the downfall
of Saddam. General Said wanted Janabi to help him organize the tribes of
central Anbar into a protection force that was later called the Eagles Cell,
which was to report on any Iranian or terrorist moves in the province. Suwadawi
made friends with Electricity Minister Ayham al-Samarraie in November 2003 as a
way to reach out to the new Iraqi government. Through that contact, Suwadawi
began providing information to Baghdad and the United States about what was
going on in Anbar. Despite these early moves, neither sheikh got any real
support. At the time, the United States was only really concerned with
protecting their own forces, and were unsure of which Iraqis to work with,
while Minister Samarraie and General Said ended up only giving marginal support
to the Anbar tribes. That left Suwadawi and Janabi on their own.

After a series of attacks upon
their families Suwadawi and Janabi each decided to fight the insurgents. In
April 2004, militants kidnapped Janabi’s brother and three children in Fallujah,
and then in October his uncle was taken as well. By the end of the year Janabi
was attempting a revolt against Al Qaeda in retaliation. He met with
Electricity Minister Ayham al-Samarraie, who promised to get U.S. support for
Janabi’s plan, but nothing came of it, and Samarraie was replaced in government
after the 2005 elections. Suwadawi followed a similar path. In September 2006,
one of his brothers and three of his tribesmen were kidnapped. That led him to
declare war on the insurgents, and the two began working together. Janabi and Suwadawi
went to the local Marine commanders in Anbar looking for support, but got
nothing. Suwadawi thought that the Americans did not take them seriously
because they only had a few fighters under them. The insurgents took Suwadawi and
Janabi much more seriously. They immediately began attacking the two sheikh’s
men with small arms and mortars. Later they called for a meeting with Suwadawi,
but he felt like it was a trick to kidnap him and backed out. Al Qaeda in Iraq
was notorious for using violence against those that did not agree with them. The
Islamists victimized many tribes to get their support or allow them to operate
in their area. Suwadawi and Janabi were just two of many that eventually had
enough of this intimidation, and decided to take a stand. Unfortunately, the
U.S. did not recognize the changing situation in Anbar. Starting in 2005
several other sheikhs tried fighting the insurgents, but received only sporadic help from the Americans.

By late-2006 Suwadawi and Janabi
were prime targets of Al Qaeda. On November 25 they were attacked in Suwadawi’s
compound in what became known as the Battle of Sufiya. He claimed that 850 fighters came after him, while only
17 men defending him. They were able to hold on for the entire day until U.S.
forces finally came to their aid at night. This was a huge battle that would
later make Suwadawi and Janabi famous. The numbers might be an exaggeration, as
the two liked to embellish their stories as part of their propaganda campaign
against the insurgency, and to gain more followers. That worked out for them,
as the two were able to convince 12 tribes in East Ramadi to join them afterward.
The two sheikhs also got more cooperation from the local U.S. commander, and
began conducting joint operations and got their men recruited into the local
police. At the same time the two felt like they were still in constant danger.
They didn’t trust the local Iraqi officials and other tribes, because they were
convinced that insurgents had infiltrated them. As a result, they would tell
Anbar officials they were going to raid one area, and then go to another. They
also would not discuss important information over the phone, as they believed
militants were listening in. Suwadawi and Janabi eventually began working with
Sheikh Abdul Abu Risha and joined the Anbar Awakening. Together they helped
establish tribal security forces stretching from Ramadi to Fallujah. They still
faced heavy losses as Al Qaeda conducted a series of assassinations against
their men. By 2006 the U.S. had almost written off Anbar. Insurgents had free
reign in the province and had co-opted many of the tribes there often through
threats and murder. That caused a backlash that eventually created the
Awakening. For those sheikhs who first decided to take on Al Qaeda life could
be short as the group intensified their attacks upon those who defied them.
Suwadawi and Janabi were not only personally targeted, but lost dozens of men
in the process. That was the cost of turning around Anbar.

Sheikh Jassim Suwadawi and Sheikh Abdul
Janabi became famous in Ramadi for their heroism in the Battle of Sufiya.
It was a long road however from being unemployed soldiers after 2003 to being
Awakening members. Despite their determined efforts they received little
support from Baghdad or the Americans. Their families and tribes suffered
kidnappings and murders by Al Qaeda in Iraq, which only increased when they
decided to join the tribal revolt. They paint an important picture of what a
difficult situation many Anbar sheikhs were going through from 2003 to 2006,
and how that led a few to stand up to the insurgents, and finally secure the
governorate.

Wednesday, September 25, 2013

Iraq just issued its new 5-year
National Development Plan (NDP). Its main goal is to use the country’s vast oil
wealth to diversify the economy towards agriculture, industry, and other
sectors. It has the same basic goals as the previous plan. The problem is that
the NDP is not a real path of action for Baghdad to follow rather it just sets
broad goals for Iraq. More importantly, the government does not pay attention
to it when passing legislation or making policy, which means it has no real
affect upon the future of the country.

September 2013, Iraq’s latest
National Development Plan (NDP) was announced. Its main focus is upon diversifying the economy away from oil dependence. Deputy Premier Hussein
Shahristani said that the country would use its oil revenues to build up
industry. The NDP also emphasizes developing building and services,
agriculture, education, transportation and communication, and energy. In
farming for example, it wants Iraq to reduce imports and move towards
self-sufficiency. It calls for wheat production to be expanded to 6 million
tons and barley to 1.2 million tons by 2017. By doing so, it hopes to alleviate
some of the differences between rural and urban areas. These goals are to be
achieved by $357 billion in investment over the next five years. That would be
just over 50% of predicted oil revenues during that same time period. Since
Iraq is the most oil dependent country in the world, developing other
industries is a necessity. Other sectors of the economy have witnessed a drastic
decline since 2003 due to some ill conceived policies implemented by the
Americans and Iraqis. Dependence upon petroleum also has wide ranging effects
upon politics and society such as breaking the social contract between the
public and the government, decreasing the competiveness of other industries,
and causing corruption. The NDP recognizes these negatives that derive from the
natural resource curse, and advocates for an alternative path for the country
to follow.

The problem for Iraq is if the new
NDP suffers the same fate as the previous one. The old development plan set out the same broad goals to diversify the economy. The issue is that neither
includes a real plan for the government to follow. Instead it just sets a
possible direction for the country with some broad benchmarks to reach. More
importantly, the government does not base its laws or policies upon the NDP. Each development plan therefore, is simply a recommendation for what
Baghdad should do, not what it actually does. For example, the NDPs have called
for a huge increase in public investment, yet each budget traditionally commits
60-70% of its funds to salaries and pensions. The 2013 budget only sets aside
38% of its money for investment. Another issue is that Iraq’s politicians only
think short-term. They have control of a huge amount of money each year, and
want to use it to expand their own base via large patronage networks. That
means more government jobs and increasing the role of state-owned enterprises
even though that means less money for Iraq’s development. There are few
incentives for Baghdad to change its ways, which is another reason why the NDPs
are never followed.

Iraq’s economy is in desperate
need of diversification. Last year the United States Agency for International
Development (USAID) warned that the country was at a crossroad. It could choose
to develop its other industries or become even more dependent upon oil. So far,
it has followed the latter. That was despite the fact that the previous 5-year
development plan called for moving away from the energy sector. That’s because
the NDP is put together by the Planning Ministry, but then rarely followed up
with any specific policies that could help achieve its goals. Even if it was
made official policy there’s no reason for politicians to follow it. The huge
revenues that oil generates allow politicians to increase the public sector by
funding more and more government jobs to hand out to their followers, and
leaves plenty leftover to steal as well. There is little inducement therefore
to change, and to make the Development Plan a reality. The country will suffer
the consequences as its future will be determined by an oil industry that it
has little control over, and politicians who only think about their own selfish
goals.

Tuesday, September 24, 2013

Opponents of Prime Minister Nouri
al-Maliki have recently focused upon the judiciary as one way to lesson his
power. They have targeted Chief Justice Medhat Mahmoud who dominates the courts
as head of the Supreme Judicial Council, the Federal Supreme Court, and the
Cassation Court. In December 2012, parliament passed a law separating the head
of the Judicial Council from the Supreme Court, and then the Accountability and
Justice Commission attempted to remove Judge Mahmoud from office for his work
under Saddam Hussein. The very courts that Mahmoud controls overturned both of
those moves. The judge therefore remains at the top of the courts, and a key
ally of the premier.

Opponents of PM Maliki have tried and failed to limit his powers by going after Chief Justice Mahmoud (Shafaq News)

On September 17, 2013, Iraq’s
Federal Supreme Court canceled the December 2012 law separating it from the
Supreme Judicial Council, and announced that Judge Medhat Mahmoud would
officially return to head both. The ruling was due to an appeal made by the head of the State of Law bloc in parliament Khalid Atiya. The law was
passed at the end of last year by a coalition of opponents to Prime Minister Nouri al-Maliki made up of the Iraqi National Movement (INM), the Sadrists, and
the Kurdish Coalition. The legislation was meant to cut down Mahmoud’s domination of the courts as he not only heads the Council and Supreme Court,
but the Court of Cassation as well. Mahmoud was removed from the head of the
Council back in February, but his short hiatus was now put to an end by the
very court that he heads. The legal committee in parliament said it would abide by the ruling, but individual lawmakers from the Sadr bloc and Iraqi National
Dialogue Front, which was formerly a member of the INM, voiced opposition. Judge Mahmoud has been a staunch ally of the prime minister issuing one ruling after
another enhancing his power over the government. Maliki’s critics therefore
targeted him several times earlier in the year. Each attempt has failed
however, since Mahmoud controls the courts.

From December 2012 to March 2013
there was a flurry of activity by parliament and the Accountability and Justice
Commission to try to limit Judge Mahmoud’s power. In March, it was announced
that the judge would go on trial for alleged crimes during Saddam’s times. The charges were filed by independent lawmaker Sabah al-Saadi, who said he
had collected evidence from ten families who accused Mahmoud of passing death
sentences against their relatives during the former regime. (1) Saadi has been
one of the judge’s greatest critics, calling him a supporter of Maliki’s dictatorship. Back on February 12, the Accountability and Justice
Commission, which replaced the old DeBaathification Commission, said it removed
Chief Justice Mahmoud from the head of the Judicial Council for his ties to the
Baath. The next day, the December judicial law took affect, and Mahmoud lost
control of the Supreme Court as well. The Cassation Court ended up rejecting the Accountability and Justice Commission’s decision claiming there was no hard
evidence against him. Of course, this was another court that Mahmoud was in
charge of. Saadi and others also demanded that the judge step down, because he
is far past the retirement age of 68. While Maliki’s opponents used a variety
of means to get rid of Mahmoud they all failed in the end, because they could
be appealed to the courts. The conflict of interest between them ruling upon
their own chief justice was not an issue, because rule of law is weak in Iraq.
Not surprisingly then, they issued one judgment after another in favor of Judge
Mahmoud beating back the attempts to lesson his influence.

Judge Mahmoud has a very long
history with Iraq’s courts. He served under the Baathist regime, and then was appointed the supervisor of the Justice Ministry in June 2003 by the Coalition
Provisional Authority. He was then made deputy president of the Federal
Appeals Court, before assuming its head in March 2005. He went on to become the
Chief Justice of the federal Supreme Court, which by law also gave him
leadership of the Supreme Judicial Council. Many believe that his history under
Saddam made him deferential to whoever was in power, and thus he has forged
close ties with the current Prime Minister Nouri al-Maliki. He has issued
controversial decisions that have increased the premier’s control over the
independent commissions, influenced the 2010 national election, and reduced the
parliament’s power to issue legislation to name just a few.

Judge Medhat Mahmoud has provided
a rare target that has unified the diverse opponents of Maliki. Even erstwhile
allies of the prime minister like the Sadrists have been angered by Mahmoud’s
judicial rulings as they have cut into the power of the parliament, and
lessened the divisions between the different parts of the government. That
allowed rare cases of consensus amongst lawmakers to pass the judicial law in
2012 attempting to separate the Judicial Council from the Supreme Court. The
Sadrists and independent Parliamentarian Saadi also attempted to use the
Accountability and Justice Commission against the judge. All these moves failed
however, because they could be appealed, and the courts were not going to rule
against Judge Mahmoud. He thus has been able to hold onto his various positions
in the judiciary, much to the chagrin of his critics. The next question facing
him is what will he do if Maliki is defeated in the 2014 elections, which is an
increasing possibility given the deteriorating security situation. Will the
Chief Justice make some ruling to help the premier hold onto power or will he
acknowledge the change in direction, and attach himself to however comes out on
top?

FOOTNOTES

1. Shafaq News, “Ten complaints submitted
against Mahmoud,” 2/20/13

SOURCES

Alsumaria, “Justice and Accountability: Denunciation de
Mahmood and legal Badri began working,” 2/19/13

Monday, September 23, 2013

The security situation in Iraq is
already bad, but recent anecdotal stories could be pointing to things getting
much worse. In Basra, there are reports of threats and killings of Sunnis in
retaliation for attacks upon Shiites in the rest of the country. In Diyala and
Dhi Qar there have been stories of families fleeing intimidation, while in
Baghdad an angry mob burned a suspected suicide bomber and bodies have been
found dumped and executed. These are all happening in the midst of the
government’s latest security operation, which is proving as ineffective as the
last one. These recent acts are directly related to the inability of the
government to contain the insurgency. If these types of events become more
common it could be a sign that society is breaking down once again, and armed
groups are taking matters into their own hands.

In Basra, the police chief was
fired recently after attacks and intimidation of Sunnis in the city. In early
September, the Basra provincial council voted to dismiss the police chief
General Faisal Abadi. The council had been complaining about the lack of
security in the province since July, and finally took action for Abadi’s
inability to solve the problem. Council members claimed that Sunnis were being
targeted in Basra City. The Sunni Endowment for the governorate called for an investigation into assassinations of its members, and claimed that Sunni
families were receiving death threats to leave. A lawmaker from Basra added
that several Sunni imams and former politicians had recently been killed as
well. The head of the Endowment Abdul Karim Khazraji eventually closed down its mosques in the city for safety, while a Basra police officer confirmed
to the Associated Press that at least 17 Sunnis had been murdered in the city
over the course of the last several weeks. On September 17, a small group of people came out to protest in the center of the city against the violence,
calling for cross sectarian unity, and an end to the threats and intimidation. Every couple months Al Qaeda has been able to set off a bomb in Basra City,
but otherwise it has been saved from the wave of explosions and shootings
occurring in the central and northern regions of the country. These stories of
threatening messages and assassinations are therefore a troubling sign that the
mood in the south may be changing. As security deteriorates in the rest of the
country, people in Basra are taking out their frustrations in the worse
possible way, on their fellow Basrans. The solidarity shown by other citizens
of the city is a good sign, but they are unlikely to sway the militants who
have been committing these crimes.

Police standing guard outside of a Sunni mosque in Basra (AP)

Anti-sectarian violence rally in Basra Sep. 2013

Basra is not the only southern
province that has seen trouble recently Dhi Qar has as well. There the Al
Sadoun tribe has been targeted. The Deputy Special Representative of the United
Nations in Iraq Gyorgy Posten issued a statement on September 19 saying that he was worried about sectarian displacement in the province. This came after
stories of up to a 150 families from the tribe had been forced from their homes
and moved to Salahaddin. A local official said that only seven families had
left, claiming that the press was exaggerating things. He told Radio Free Iraq
that there were two shootings that increased tensions, and led people to blame
the Sadoun tribe. Prime Minister Nouri al-Maliki met with a delegation from the
tribe, promising to resolve the situation. Like in Basra, dozens of people came out in Nasiriyah against the attacks upon the Sadoun, calling for solidarity
and coexistence in the governorate. The situation in Dhi Qar is much like
that in Basra. Both have only seen occasional terrorist bombings, so this
incident of forcing out tribal families, no matter how many it might have been,
is a large escalation. Tensions have risen throughout much of the country as
insurgents have increased their operations over the last several months. The
government seems incapable of stopping them, so now citizens are beginning to
take matters into their own hands, a troubling trend if it continues.

Demonstrators in Nasiriyah who came out against attacks upon the Sadoun tribe

In Diyala, insurgents have been
able to create more divisions. In July, a teenage boy blew himself up in a funeral tent. Al Qaeda in Iraq was blamed, but when it turned out the
bomber was from a local tribe, it caused a dispute with other sheikhs who
wanted revenge. Afterward, Shiites went after Sunnis in Muqtadiya, killing some
and telling others to leave. The New York Times quoted a government official
who stated that 365 families had fled the city as a result. Diyala has been a
hotbed of militants for years, and was once the scene of bloody sectarian
fighting during the civil war. Now it appears that those splits have
re-emerged. There have been dozens of attacks in the governorate, but this was
the first time that it was reported that average people retaliated after an
attack. Again, the violence is leading to a breakdown of law and order.

A Sunni family displaced from Muqtadiya after receiving threats (NY Times)

Baghdad has been the scene of the
most intense violence since it is the largest city in Iraq and the seat of
government, but things are getting uglier there as well. In late August, a crowd attacked a man that was an alleged bomber, setting him on fire as police
stood around and did nothing. The Interior Ministry said that two car
bombs had gone off in the area previously, so people were angry before they
found the man. Then on September 19, Radio Free Europe had a story about ten young men who were found handcuffed, blindfolded, and shot in the head near
Sadr City in eastern Baghdad. That was followed by Al Rafidayn announcing
five men found shot in the head in Sadr City, Ghazaliya, and Arab Jabour areas
of the city. This was the first time in years that people had been
discovered executed in that manner. These are more troubling incidents. If
there are more they could be the first signs that Iraq is descending again into
sectarian war. The government should be the one that protects, investigates,
and punishes perpetrators of crimes and attacks. Here, the security forces did
nothing as a man was burned. The executions are even more worrying, because
those were the exact same tactics used by militias in the past. Each time
examples like these appear it is more evidence that the public has lost
confidence in the government to protect them.

That’s because Baghdad has
constantly announced one security offensive after another in recent months, but
with little to no effect. Currently the Revenge of the Martyrs is taking place
in central and northern Iraq. Parliament’s security committee is questioning the competence of the army and police after hearing multiple complaints from
people about mass arrests during this on-going operation. A Sadrist member
of the committee for example, said that the government depends upon the support of the people, but that it was losing it due to mass detentions. One
reason for the end of the civil war was that the Americans changed their
tactics from punitive and reactionary to pro-active and community based. The
Iraqi forces were intimately involved in these tactics, but since the U.S.
military withdrawal, they have reverted right back to what the U.S. and Saddam
Hussein used to do, which is to arrest all military aged males during raids,
which only makes people angry. It has also had no affect upon security, as the
number of deaths is now the highest they’ve been since 2008. That’s a major
reason why these incidents of vigilante justice are increasing. The insurgency
is witnessing a re-birth, and the government appears helpless to stop them.
That’s leading to people retaliating against groups they feel are responsible
for violence on their own.

If more and more Iraqis take the
law into their hands that could lead to a new civil war. The insurgency has
always tried to restart the sectarian fighting as a way to bring down the
government. For the last several years however, people have let the security
forces deal with bombings and hunting down militants. Now it appears that
militias and vigilantes are going after people in retaliation after attacks.
What’s more troubling is that these incidents are occurring in southern Iraq,
which is relatively peaceful compared to the rest of the country where violence
is far more common. If they spread that could be the breakdown of society, and
the beginning of a far larger conflict than what is already taking place in the
country. At the same time, the fact that people came out into the streets to express solidarity with their fellow Iraqis after attacks shows that the country may not be at the brink just yet.

SOURCES

Dar Addustour, “Defense Resets 44
associate decision-Maliki,” 8/19/13

Alsumaria, “Dozens of people from Dhi Qar organize a protest
in solidarity with the families of al-Sadoun,” 9/20/13

Arango, Tim, “Sectarian Violence Reignites in an Iraqi
Town,” New York Times, 9/18/13

Thursday, September 19, 2013

In 2013, most of Iraq’s provinces
received new governments following elections. One of the first things many of
the new administrations did was announce that the previous governorate councils
walked away with millions of dollars in corrupt development deals. Over 200 of
such cases were just discovered in Baghdad. The new governor blamed the theft
for the lack of services in the province. The problem is the new officials are
likely to be just as crooked as the old ones as stealing government funds is
considered a privilege of holding office in Iraq.

In September, new Baghdad Governor
Ali al-Tamimi announced that tens of millions of dollars had been stolen by the
previous provincial government. The governor held a press conference saying
major politicians and businessmen from the previous administration were involved. He said one project had $68 million taken, while another had $18
million missing, and included such notable landmarks as the Baghdad Airport. In total, the new provincial council turned over 211 cases to the
anti-corruption Integrity Commission to investigate. He added that none of the
projects surpassed a 5% completion rate, and was the reason why the capital
lacked essential services. Baghdad is not the only new local government that
has charged the old one with stealing tons of money. Governor Tamimi also has a
vested interest in condemning the former council. Tamimi is from the Sadr
Trend, while his predecessor was from Prime Minister Nouri al-Maliki’s State of
Law. One of the themes that the Sadrists have been pushing in recent years is
that they are against corruption. Moqtada al-Sadr has also become increasingly critical of the premier in anticipation of the 2014 national vote. The
governor therefore is killing two birds with one stone by bringing up these
cases. He can try to win over the public with his claim of clean government,
while taking on Maliki at the same time. The real question is if anything
substantive will come of it. Iraq is rated one of the most corrupt countries in
the world. That’s because graft has become institutionalized as a means of
ruling the country. Taking money is considered part of the compensation for
taking a public job, and accepting bribes is how things get done. Therefore
there is no push to follow through on any major corruption case. Since these
ones allegedly involve powerful people nothing will come of them, and Governor
Tamimi is just looking to score political points by making them public.

Baghdad’s news that millions were
absconded with by the previous provincial government should come as no
surprise. The administration before that probably stole as much as it could,
the last one did the same, and the new one will too. This is the sad story of
Iraq today. Since the country earns such huge sums of money from oil revenues
officials believe they can take what they want. The result is dozens and dozens
of projects that were either just started or only in the planning stages are now
sitting dormant across Baghdad. This needs to be considered every time
politicians announce some new project in any part of the country. There’s a
good chance that they will result in nothing, because they are simply a scheme
to steal money. Iraq has huge needs in terms of infrastructure and services
after years of sanctions and war. Many of those will never be met because of
the chronic corruption, which is more widespread today than it ever has been.

Wednesday, September 18, 2013

In September 2013 Iraq’s Oil
Ministry and British Petroleum (BP) signed a contract for the Kirkuk oil field
in northern Iraq. This appeared to be controversial at first, because the field
is in the disputed territories, and the Kurdistan Regional Government (KRG) has
demanded that all deals for the field have to have its approval. BP is only
doing technical work however. It is interested in developing Kirkuk as well,
but the arguments between the central and regional governments will likely
prevent that from happening any time soon.

The Kirkuk field stretches from the disputed territories into the Kurdistan region

BP will be evaluating the Kirkuk
field for the Oil Ministry to see how to renovate it. The contract might be worth up to $100 million. The Kirkuk field is divided into three domes. BP
will only be working on the two under Baghdad’s control, which are the Baba and
Avana Domes. The corporation signed a preliminary deal for Kirkuk back in January after more than a year of talks. The Oil Ministry is interested in
this work, because Kirkuk is the oldest field in the country having been
discovered in 1927, and production has seen a steady decline. In the early
2000s it was pumping around 900,000 barrels a day. Today it is only producing
approximately 260,000 barrels. It is therefore in desperate need of repair and restoration.
BP is hoping to do this work, but so is Russia’s Lukoil. A production
contract for Kirkuk has been held up due to Baghdad’s dispute with Kurdistan
over who has control over oil policy. The KRG claims that any development deal
signed with the Oil Ministry for Kirkuk would be illegal and unconstitutional,
claiming that it must be involved. Kurdish officials have told BP that they can study the field, but not do any drilling or production work. The KRG
occupies the northern dome, but its long-term ambition is to annex the entire
area for its vast oil reserves. That’s why it has objected to any Oil Ministry
production contract. That hasn’t stopped Baghdad from hearing offers, and it is
obviously hoping to revive the field due to its declining output. The differences
within the country over hydrocarbons have prevented that from happening so far,
and will probably continue to do so in the foreseeable future.

The Kirkuk field is divided into 3 domes with the KRG controlling the northern Khurmala Dome and Baghdad running the other two (GEO ExPro)

The argument between Baghdad and
the KRG over petroleum has been deadlocked for years now with no end in sight.
Each claims that it has the sole authority to sign contracts and manage natural
resources. Kirkuk is one centerpiece of this dispute, because it is coveted by
Kurdistan. That’s why the BP signing made such headlines when it was announced.
It was only for studying the field however, which the Kurds have agreed to.
Until the larger issues over oil are resolved there’s little hope that either
the central or regional governments will be able to move ahead with their plans
for Kirkuk.

Tuesday, September 17, 2013

Sheikh Abdul Abu Risha and Sheikh Wissam Abdul
Ibrahim Hardan were the brains behind the Anbar Awakening. The two met in 2006,
and decided to organize the major tribes in the province against the
insurgents. The problem was that many of the sheikhs were reluctant at first to
join in Abu Risha and Hardan’s scheme. The Awakening also had to convince the
Americans of their sincerity, and deal with the Iraqi Islamic Party that
controlled Anbar. Once they overcame these difficulties, and were successful in
expelling the militants however, the Awakening began breaking up. Those
divisions are still apparent today as Hardan has now become an ally of Prime
Minister Nouri al-Maliki, and opposes his former Anbar brethren. The Awakening
experience for Hardan then was a disappointment. He became a hero for fighting
militants, but then failed to gain the local and national power that he hoped
for.

Sheikh Hardan had his own views on opposing the insurgency
before the Awakening was formed. He felt that the militants were using indiscriminate violence. They killed former military officers and sheikhs
in Anbar, along with pushing out many of the province’s Shiite residents. Many
of these people became refugees in neighboring countries or within Iraq itself.
Sheikh Hardan finally had enough, and in 2005 gathered around 500 ex-soldiers
to fight the insurgents. He went to then Defense Minister Sadoun Dulaimi who
was a relative of his to ask permission for his fighters to carry weapons, but
he was turned down. That put an end to Hardan’s initiative for the time being,
because without government support his men could be arrested and killed by the
security forces. Hardan’s main motivation was his belief that the insurgents
had gone too far in Anbar. His first attempt at challenging them failed, but he
did not give up.

In 2006, Hardan was stirred into action again, this time by
Sheikh Abdul Abu Risha. The two were connected by marriage, as Hardan’s wife
was Abu Risha’s cousin. Abu Risha contacted Hardan to meet with him about an idea
to get the sheikhs in Anbar organized against the militants. Hardan was
reluctant at first, but they eventually got together and came up with a plan.
The first step was that they needed to convince the tribes that the time had
come to confront the insurgents. The second was that they had to get popular
support. Hardan then went about contacting the clerics in the province such as
Abdul Malik al-Saadi and Ahmed al-Kubaysi. Hardan eventually got a fatwa
condoning attacks upon the militants. This was the first move towards forming
the Awakening. Many American accounts of Anbar stress the tribes, but fail to
mention the role of the religious establishment in transforming the province. Abu
Risha and Hardan knew their importance, and that was why they went to them
first. Their personal relationship was also important, because Abu Risha was a young sheikh from a minor tribe. He came up with the idea of a new tribal
revolt, but lacked the standing to convince others of his idea. That was why he
reached out to Hardan who was far more prominent to talk to the sheikhs. He
became the elder statesman of the Awakening.

Next on the agenda was a trip to Amman, Jordan to convince
the sheikhs who had fled the fighting in Anbar to come back and join the
revolt. Sheikh Hardan was again at the forefront contacting tribes and their
leaders trying to get them to commit 50 fighters each. Many did not want to
work with Abu Risha, because he had contacts with the Americans, and was
therefore considered a collaborator with the occupation. Others accused Hardan
and Abu Risha of not being real sheikhs, and attempting to usurp their power
over their tribes. Hardan used the murder of Sheikh Khalid Araq Ataymi from the
Albu Aetha tribe by Al Qaeda in Iraq as a rallying point, saying that the other
tribes needed to avenge his death. Ataymi was thinking of his own uprising at
the time, and was killed as a result. Finally a meeting was set in September
2006, which led to the formation of the Anbar Salvation Council. 41 sheikhs
were chosen to be on the council with Abu Risha named governor of Anbar since
the group claimed the real one was illegitimate, Hardan was made his deputy,
and Sheikh Hamid Farhan al-Hayes was made head of the group. Hardan’s standing
in Anbar and the continued violence of the insurgents helped turn opinion in
Abu Risha’s favor, and led to the creation of the Awakening. Hardan also
claimed that he was given a speech by the Americans to deliver to the sheikhs.
If true, that might have convinced some to join as well, because that meant
they would get the military support of the U.S.

After several tribes rose up in Anbar, Hardan and Abu Risha
tried to acquire government approval for their actions. Hardan contacted his
friend Parliamentarian Mithal al-Alusi from the Ummah Party to get him to be a
middleman with Baghdad. Eventually an appointment was made with Prime Minister
Maliki, which went very badly. The premier did not want to give the tribes any
aid, they in turn threatened him, and it seemed like nothing was achieved. Two
days later, National Security Adviser Mowfaq Rubaie announced that the
government was backing the Awakening. Hardan gave no explanation for this turn
around. One of the goals of the Awakening from the beginning was to gain
official recognition, something Hardan had tried and failed at in 2005. The
group always wanted to be accepted by the authorities so that they could openly
operate, and more importantly it wanted to put their men into the local police
and army units, so that they could eventually take over Anbar. By controlling
the security forces they would have a monopoly on the use of force a
traditional way to power in Iraq. Maliki was weary of them at first, since they
were Sunnis, and many had contacts with the insurgency, but they were
eventually accepted as an indigenous Iraqi movement. That would later cause
divisions in Anbar, as Abu Risha and Hardan were accused of being puppets of
Baghdad. Those internal disputes would be the downfall of the Awakening.

Getting the support of the Americans and the Anbar
provincial government proved much more difficult and divisive for the
Awakening. Abu Risha was always in contact with Americans forces to inform them
of his operations so that his units would not be attacked. They went back and
forth, but eventually threw their lot in with the tribes. The governor of Anbar
at that time was Mamoun Sami Rasheed from the Iraqi Islamic Party. He did not
approve of the Awakening seeing it as a threat to his power. Hardan also warned
Abu Risha about getting involved with politicians, believing that they could
easily manipulate the sheikh. The Americans set up a meeting in Fallujah
between Governor Rasheed, Abu Risha, General Richard Zilmer the Marine
commander in the province, and a delegation from the U.S. Embassy. After a
large argument between Abu Risha and Governor Rasheed, General Zilmer suggested
a compromise between the two, which eventually allowed five members of the
Awakening to join the provincial council. This deal caused a split between
Hardan and Abu Risha and his brother Ahmed Abu Risha. Hardan accused Ahmed Abu
Risha of being close to the Islamic Party, and selling out the tribes. Hardan
claimed that this divide within the movement increased in the following months,
and led to it being infiltrated, and Abdul Abu Risha’s eventual assassination
in September 2007. The Americans did finally come around and support the
Awakening after a rough start. The outreach to the Islamic Party proved much
more difficult, and was perhaps the undoing of the organization. Ahmed Abu
Risha continued to make deals with the Islamic Party such as before the 2009 provincial elections. This was condemned by other members of the Awakening
such as Sheikh Hamid al-Hayes. It also led to the official break-up of the
group as Abu Risha, Hayes, and two other prominent members Ali al-Sulaiman and
Amer al-Sulaiman all ran separately in the vote. Abu Risha’s party ended up
winning the most seats on the Anbar council in 2009, but at a price, the end of
the Awakening. Today, the major sheikhs in the movement have all reverted to
their own individual agendas. Abu Risha continues his ties with the Islamic
Party, and is a major leader in the Anbar protest movement, while Hardan is now allied with Sheikh Hayes and Prime Minister Maliki in opposition. Once
the unity of the sheikhs was lost, so were their hopes for greater power within
the country. The break-up of the Awakening allowed the Islamic Party, Baghdad,
and others to cut deals and play divide and conquer in Anbar. It is these
continued splits within the province that help explain why Speaker Osama
Nujafi’s Mutahidun, which was backed by Abu Risha and the protesters only won eight out of 30 seats in the 2013 provincial elections. There are simply
far too many leaders in Anbar to win a decisive political victory there. From
the start, Abdul Abu Risha and Hardan wanted national status. It seemed like
they were going to achieve that when both Baghdad and the Americans supported
the Awakening, they were able to place their men within the Anbar security
forces, and gain seats on the Anbar council. That success however, led to
jealousy and bitterness between the sheikhs, which still exist and divides the
province.

Sheikh Hardan’s story highlights the rise and fall of the
Anbar Awakening. He and Sheikh Abu Risha were the founders of the Awakening,
and had a grand vision of turning their tribal revolt in Anbar into a national
movement that would lead to influence in Baghdad. Their early success turned to
disappointment when they got involved in politics. Hardan warned about cutting
deals with the Iraqi Islamic Party, and that led to divisions within the
movement, and its eventual break-up. Today there are several different
Awakening groups in Anbar all competing with each other. Hardan leads one, and
has aligned with Premier Maliki against Abu Risha and the protests. These
internal rivalries have weakened the sheikhs, pitted them against each other,
and opened the door to outside influence. That explains why the Awakening did
not go from a local success story to a national power in Iraq.

Monday, September 16, 2013

Iraq’s economy is based upon a contradiction. It has huge
natural wealth with its petroleum reserves that are being developed, and
provides most of the country’s revenues. At the same time that industry hardly
provides any jobs. That is a classic dilemma posed by the oil curse. To help
explain this issue and others that affect the country is Lehigh Professor of
Economics Frank Gunter. Previously Prof. Gunter was the lead economist to the
U.S. military in Iraq from 2005-2006 and 2008-2009. And he is the author of The Political Economy of Iraq: Restoring Balance in a Post-Conflict Society(Edward Elgar Publishing, 2013).

1. Iraq is a classic
example of the oil curse. Can you briefly explain what that theory is and how
it applies to Iraq?

The oil or natural resource curse – also known as the
paradox of plenty – concerns developing countries whose economies are dominated
by the production and export of a single natural resource. Such countries tend
to have worse economic and political outcomes then countries with more
diversified economies. Iraq is seriously vulnerable to the oil curse. Not only
is it the most oil-dependent country among the Middle East and North Africa
(MENA) countries, Iraq is the most natural resource dependent country in the
world. Oil production and exports account for roughly two-thirds of the
country’s GDP and provide almost 95% of government revenues.

One aspect of the oil curse is the Dutch disease where a
large value of exports leads to an appreciation of a country’s currency. In Iraq,
the dinar has appreciated about 20% since December 2005, which reduced the
competitiveness of the country’s non-oil exports and contributed to a flooding
of the Iraqi economy with cheap imports.

Also, the large and growing revenues from oil exports have
not only allowed the Iraqi government to increase the number and compensation
of government workers but also oil wealth has fundamentally changed the
relationship between the government and the people. Concentration of economic
power tends to lead to concentration of political power. If the party that
controls the government also controls the economy then those in power begin to
believe that choosing the national leadership is too important to entrust to
the voters.

There is also an important psychological effect. In most
long-lived democracies, the major source of government revenue is tax receipts.
People in such countries feel that they are “buying” government services and if
the government fails to provide, at reasonable cost, the services demanded by
the taxpayer-citizens then they will attempt to “fire” the government through
the ballot box. But in Iraq, the government doesn’t need to tax citizens.
Cynically, the primary role of Iraqi citizens is to receive - and be grateful
for – whatever level of service that the government decides is appropriate. In
this sense, Iraqi citizens are not independent entities that support the
government. Rather they are symbolically, and often in reality, clients of a
“beneficent” government. As Samuel P. Huntington stated in 1991: “’No taxation
without representation’ was a political demand; ‘no representation without
taxation’ is a political reality.”

Iraq might best be described as having partially evolved
from Saddam-era central planning to state-guided capitalism in which government
tries to guide the market by supporting particular industries that it expects
to become ‘winners’ or that are important sources of employment.But, if oil continues to dominate the
economy, there is a real danger that Iraq’s state-guided capitalism is only a
way station to becoming an oligarchic capitalistic state - like most of the
other countries in the Arab Middle East - in which the bulk of the power and
wealth is held by a small group of individuals and families. Despite wealth from
natural resources, such oligarchic capitalistic states tend to have great
income inequality, sluggish growth, large informal or underground sectors, and
massive corruption.

2. You’ve argued that
failure to develop the economy away from the oil industry is a national
security issue for Baghdad. What kinds of risks are involved if Iraq doesn’t
break away from its oil dependency?

In the absence of economic diversification, there are both
short-term and long-term threats to political stability. Due to the dominance
of oil revenues in the national budget, government capital expenditures are on
a roller coaster of world oil prices. When oil prices are high as in 2008 and
2011-2013 then the government can expand the number of civil service jobs,
increase wages and pensions, increase spending on the social safety net and
essential services, as well as accelerate infrastructure investment. However,
during years of lower oil export revenues such as 2009-2010 then the government
responds by slashing capital expenditures in order to preserve funds for
current expenditures such as the government’s wage bill.

Since public investment accounts for over 90% of total fixed
capital formation when the government cuts such investment in response to lower
oil prices, the effect is serious. Most infrastructure and other investment in
roads, electricity, schools, clinics, water supply, etc. slows or grinds to a
stop. Partially completed multi-year building projects are abandoned for months
or years until investment spending is restored in a future budget. When
projects are restarted, it is often discovered that previous work must be
redone due to looting, vandalism, environmental damage, or plan revisions. This
waste and delay tend to have the most serious impact on private sector firms
and workers resulting in increased unemployment. As discussed below in response
to another question, this rise in unemployment threatens political stability.

3. Baghdad says that
it is committed to diversifying the economy and promoting the private sector.
The country consistently ranks as one of the worst business environments in the
world however. What kind of regulatory barriers do entrepreneurs face, and how
might that be solved?

MENA countries are not known for their friendliness towards
private businesses, Iraq is one of the worst in the region. It ranks 176th
in the world with respect to the World Bank’s Ease of Doing Business survey. It
is particularly difficult in Iraq to legally start a business, get credit, or
engage in international trade. And in one category, closing a business, Iraq
ranks dead last. Considering the competition from sub Saharan Africa, this is
quite a dismal achievement.

Ever since the first port-Saddam National Development Strategy of 2005, the importance of diversifying
the economy has been recognized. Unfortunately, while the economic necessity of
diversification is strong, the political will to make the difficult decisions
is weak. It is important to recognize that the regulatory hostility towards the
private business sector in Iraq is not an unloved artifact of the Saddam era
but rather is carefully maintained by the leadership of the bureaucracy. The
great regulatory complexity and expense provides strong incentives for
businessmen to offer bribes to helpful government officials. Also, harsh
regulation of private businesses reduces competition for the state owned
enterprises. These state owned enterprises tend to be high cost/low quality
producers.

What can be done? Iraqi government efforts to rewrite its own
commercial code will probably take more than a decade and will provide multiple
opportunities for officials to extract bribes in return for inserting clauses
favorable to one group or another. The World Bank and other international
organizations can provide a “model” commercial code that Iraq could adopt.
However, there is Iraqi concern that to adopt a “western” code would be
inconsistent with the business strictures of Islam. Probably the most practical
option would be for Iraq to adopt with minor modifications, the commercial code
of another Islamic state such as the UAE.

4. If Iraq were ever
able to build up a vibrant private sector how would that contribute to
stability in the country?

In the long-term, Iraq must deal with a severe demographic
challenge. Unlike Iran, its neighbor to the east, which is experiencing a
demographic collapse; Iraq still is a young country with a high fertility rate.
As a result, even after adjusting for the low labor force participation rate of
women in Iraq, the number of new job seekers is expected to grow by at least
250,000 this year and even more in the future. And this is in a country where
the combined unemployment and underemployment rate among the young is already
an estimated 80%! The experience of other low-income countries is clear: a
rising number of permanently unemployed young men is politically destabilizing.

Therefore, Iraq must create enough jobs to not only absorb
this annual increase but also shrink the pool of current unemployed and
underemployed. It is unlikely that increased public sector employment will be
sufficient. Public sector entities are already severely overmanned. In
addition, in the absence of a sharply higher oil export earnings, the public
sector will be hard pressed to achieve its current infrastructure investment
goals much less substantially increase government employment.

In developing countries, most jobs are created by new small
private businesses engaged in services and light manufacturing. Of the three
institutional requirements for such job creation – favorable regulatory
environment, available small business finance, and widespread literacy – Iraq
only has the third. In addition to regulatory hostility, the banking system is
moribund while microfinance still reaches relatively few Iraqi businesses.

5. You’ve argued that
the new Iraq has led to “entrepreneurial corruption.” Can you explain what that
means?

If corruption is the abuse of public power for private gain
then, under Saddam, corruption in Iraq was controlled from the top in a classic
case of “state capture”. It was expected that Saddam, his family, or his
supporters would financially benefit from every public and private economic
activity. As a result, corruption under Saddam differs in at least two ways
from that in post-Saddam Iraq. First, Saddam’s family and his immediate ring of
supporters captured a large proportion of the total gains from corrupt
activities.While lower levels of
government were corrupt, they captured a smaller proportion since Saddam and
his immediate supporters were careful to ensure that lower levels of the
bureaucracy didn’t divert flows of corrupt money from reaching the top. Second,
under Saddam corruption was more “honest” – honest in the ironic sense of the
old Chicago joke about an “honest judge” who, when he accepts a bribe, actually
performs the service that he was bribed to perform!

In post-Saddam Iraq, gains from corruption are more widely
distributed. While the top levels of the Iraqi government tend to be very
corrupt, they seem to be less able or willing to constrain corruption at lower
levels of government. Post-Saddam corruption is more widespread and competitive
- more “entrepreneurial”. Government officials at all levels are creatively
engaged in sometimes cooperative, sometimes competitive efforts to extract
maximum rents from not only private persons but also from other branches of the
country’s bureaucracy. As a result of this entrepreneurial corruption, bribe
takers tend to be less “honest”; corrupt members of the bureaucracy are often
unable to actually provide the services for which they accepted bribes.

It is likely that, although Saddam and his supporters were
able to steal a larger proportion of the nation’s income; current
entrepreneurial corruption imposes a more serious burden on the Iraqi people
because of the increased uncertainty resulting from entrepreneurial corruption.

6. Another side
effect of the bureaucracy and corruption is the growing and vibrant underground
economy. What is that sector like?

Private businesses in Iraq must choose between seeking to
become a legal enterprise, which due to regulatory hostility is a difficult and
expensive process, or operating in the underground economy with all of the
associated inefficiencies. One characteristic common to both options is the
necessity of paying bribes to a long line of corrupt officials. One survey of
corruption in Iraq showed that one-fifth of private businesses reported paying
40% or more of their firm’s total
revenues in bribes.

Excluding agriculture, an estimated 6% of the labor force is
employed by private legal enterprises while 20% is employed in the underground
economy. Firms in the underground economy tend to be small-scale, engaged in
services or light manufacturing. In many cases, underground entities are
engaged in illegal activities such as selling black market fuel or smuggling
across Iraq’s long open borders. However, other underground firms are engaged
in other wise legal activities that are concealed to avoid the choice of
meeting arduous regulations or paying bribes to inspectors to ignore
violations. As expected, workers in the underground economy lack legal
protections and there are stories of workers being denied pay or even
physically abused. Generally firms in Iraq’s underground economy are very
inefficient. This inefficiency arises not only from the usually small-scale
production but also from the necessity of operating in such a way so as to
avoid coming to the attention of rapacious officials.

7. Iraq’s economy
also suffers from political interference. How have politicians attempted to
manipulate and control the economy for their own gain?

Most politicians in Iraq – like everywhere else – seek to do
the right thing for their country as long as it doesn’t injure their own
self-interest. Just because a person has been elected or appointed to a
responsible government position, doesn’t make him or her more virtuous. And
like in other countries, politicians in Iraq manipulate the economy to achieve
a better life for themselves in at least two ways.

First, as discussed above, politicians engage in corrupt
activities and some have succeeded in stealing vast amounts for themselves and
their families through such illegal activities.

Second, politicians can personally benefit through
activities that, although they are not illegal, have an adverse effect on Iraqi
economic development. A major source of status and political influence for
politicians in Iraq is their control of large numbers of government jobs. It is
irrelevant that a ministry in incredibly ineffective or that a state owned
enterprise is a low quality/high cost producer of a good or service; what is
important for the status of a high level government official is the number of
jobs that they control. As a result, the ministries and state owned enterprises
tend to be seriously overmanned. As one example, the Iraqi publicly owned
railroad industry has over 10,000 employees running a system that in other
countries would require one-fourth to one-tenth as many. And that is true with
other state owned enterprises, these workers can not be fired for failure to
perform their assigned tasks to expected standards or even have their pay
docked for failure to show up for work.

Proponents of excessive ministerial and state owned
enterprise employment argue that it reduces political instability by providing
jobs for unskilled young men. However, expanded government employment in Iraq
may actually be destabilizing. It is not uncommon for a state owned enterprise
or ministry to be “captured” by a religious sect, party, sect or tribe as a
means of providing funding for the organization as well as jobs for its members.
Thus government employment can be destabilizing by supporting - with government
funds - members of political parties or other groups that may be in opposition
to the rule of law.

8. Iraq has huge
needs in terms of its infrastructure and services, and that is drawing in
increasing amounts of foreign investment. Do you think that those foreign
companies can help diversify the economy and help the private sector grow?

To date, almost all of the foreign direct investment (FDI)
flowing into Iraq has been associated either with one of the ministries or one
of the almost 200 state owned enterprises. In other words, very little of this
investment is purely private. Association with a government agency has both
advantages and disadvantages. A government partner can help cut through
bureaucratic red tape especially with respect to bringing capital equipment and
key personnel into Iraq. In addition, having a government partner can reduce
the demands for bribes.

However, the government partner probably expects to benefit
from the relationship with the foreign investor in ways that may not be clearly
delineated in a partnership agreement. Several examples might illustrate this
expectation. One European corporate investor agreed not to fire any workers in
a severely overmanned Iraqi factory. Apparently, the foreign firm thought that
it could gradually reduce the workforce through attrition until it reached
efficient levels. However, the Iraqi government partner not only demanded that
a new worker should be hired to replace each one who departs but also that the
government agency alone should select the new workers. As discussed above, this
demand reflected what the government agency saw as political reality that the
agency’s influence in Baghdad was a function, in part, of the number of jobs
that it provided for Iraqis. Another example involved a foreign hotel
management company that was informed rather late in contract negotiations that
the rooms on one floor of the hotel would be reserved for the sole use of the
Iraqi government partner without payment although it was expected that the
foreign management company would be responsible for maintaining these rooms.

As long as most foreign investment continues to take the
form of partnerships with public entities, it will have little effect on the
degree of economic diversity in the Iraq economy.

9. What direction do
you see Iraq moving in the future? Will its private sector eventually start to
grow or will it remain oil dependent with a large state-sector or something in
between?

Over the next decade, Iraq’s future will be determined to a
great extent by the degree to which the civil war in Syria on Iraq’s western
border and the dispute over nuclear sanctions between Iraq’s eastern neighbor,
Iran, and the west affect Iraq. So far these two disputes have had an adverse
impact on Iraq’s political stability as well as greatly complicated economic
policymaking but – surprisingly – these ongoing conflicts seem to have a
favorable effect on Iraq’s real economy. However, the price of oil will remain
the dominant determinant of economic development and political stability in
Iraq for the next decade.

In 2012, the U.S. Energy Information Administration
estimated three price scenarios for 2025: a high scenario where the world price
of oil is $180 per barrel (pb), a reference scenario of $120 pb, and a low
scenario of $50 pb.

The impact on Iraq of $180 pb in 2025 will probably be
mixed. If Iraq is able to raise its exports to 10.0 mbpd then Iraq’s export
earnings would reach $657 billion (in 2010 dollars) compared to $50 billion in
2010! With an expected 2025 population of 47 million, average per-capita income
would reach about $16,000 (in 2010 dollars) – seven times greater than in 2010.
This is about the same level of per capita income as Saudi Arabia had in 2010.
With this massive increase in oil export earnings, everything would be
possible: increased government employment and higher wages for government
workers, sharp rises in investment, generous provision of free essential
services, agricultural restoration, accelerated construction of homes, factories,
and government offices. New soccer stadiums would appear in every town. The al
Rahman Mosque in Baghdad would finally be completed. However, there would also
be negative effects. There would be an explosion in corruption. Efforts to
diversify the Iraqi economy away from its dependency on oil would probably
grind to a stop. And, as discussed above, without diversification, Iraqi
nascent democracy would be threatened.

At the other extreme, how likely is $50 pb oil? Increased
petroleum and natural gas production from Iraq, the USA, and other countries;
reduced energy demand from Brazil, Russia, India, and China; further
improvements in energy conservation; and peaceful resolutions of the conflicts
in Syria and Iran resulting in a reduction in oil risk premium could lead to a
return of $50 pb oil. After all, adjusting for inflation, average oil prices
were below this level for almost two decades from 1986 through 2005. The
adverse impact on Iraq’s political stability of an extended period of $50 pb
oil would be severe. The Iraqi government must earn at least $55 pb (in 2010
dollars) in order to pay its salary, pension, food assistance, and security
commitments. There would be no funds available for infrastructure investment or
expanded spending on internal or external security. If world oil prices fall
below this level for a year or two then the government of Iraq would be able to
pay for its basic expenditures by exhausting its Development Fund for Iraq
reserves, about $18 billion at the end of 2012; by persuading the Central Bank
to substantially revise its international reserves policy to make some of its
$70 billion available for fiscal purposes and by taking advantage of the
country’s limited access to world capital markets.

However, if there are more than two years of low oil prices
then not only will there be rising levels of unemployment and underemployment
but also the government will be forced to cut salaries and pensions. If Iraq’s
past is any guide to its future, cuts in wages and pensions will cause the
bureaucracy to turn against the government – undermining its policies,
participating in street protests, and possibly engaging in violent action.
Losing the support of government workers and pensioners will increase the
likelihood of a return of an authoritarian government – another Saddam or
Saddam-lite.

To insure against this outcome, Iraq must defuse the
resource curse by restoring balance – diversifying – its economy. Achieving
such economic diversification will not only require difficult economic choices
but also entail serious political risks. More than in any period since 1958,
the future of Iraq is in the hands of the Iraqis. Over the next decade, Iraq
will make - or fail to make - critical irrevocable decisions. Rich countries
with long histories of stable government can afford to make stupid decisions.
Iraq cannot.

About Me

Musings On Iraq was started in 2008 to explain the political, economic, security and cultural situation in Iraq via original articles and interviews. I have written for the Jamestown Foundation, Tom Ricks’ Best Defense at Foreign Policy and the Daily Beast, and was responsible for a chapter in the book Volatile Landscape: Iraq And Its Insurgent Movements. My work has been published in Iraq via NRT, AK News, Al-Mada, Sotaliraq, All Iraq News, and Ur News all in Iraq. I was interviewed on BBC Radio 5, Radio Sputnik, CCTV and TRT World News TV, and have appeared in CNN, the Christian Science Monitor, The National, Columbia Journalism Review, Mother Jones, PBS’ Frontline, the Center for Strategic and International Studies, the Institute for the Study of War, Radio Free Iraq, Rudaw, and others. I have also been cited in Iraq From war To A New Authoritarianism by Toby Dodge, Imagining the Nation Nationalism, Sectarianism and Socio-Political Conflict in Iraq by Harith al-Qarawee, ISIS Inside the Army of Terror by Michael Weiss and Hassan Hassahn, The Rise of the Islamic State by Patrick Cocburn, and others. If you wish to contact me personally my email is: motown67@aol.com